Background on the Situation
Panama’s President, José Raúl Mulino, announced the resolution of the tension with the United States regarding control of the Panama Canal. This came after U.S. President Donald Trump threatened in 2025 to regain control of the canal, alleging Chinese influence through Hong Kong-based Hutchison Holdings.
Historical Context
The U.S. built and inaugurated the Panama Canal in 1914, but it was handed over to Panama on December 31, 1999, under bilateral treaties. These agreements stipulate that all vessels, regardless of origin, must pay tolls based on the ship’s capacity and cargo type.
Trump’s Pressure and Panama’s Response
Throughout his presidency, Trump exerted diplomatic pressure on Panama, claiming China controlled the maritime route via Hutchison Holdings’ operation of two ports in the Pacific and Atlantic through a concession. This led to Panama, an ally of the U.S., seeking unsuccessfully for its ships to transit the canal for free, despite existing bilateral treaties.
Resolution of the Crisis
President Mulino declared in his annual New Year address to the National Assembly that Panama had moved towards a respectful relationship, regained trust, and collaborated actively with the U.S. in combating international crime.
“The bad omens and boisterous declarations with a short-term vision are now behind us,” Mulino stated, addressing his critics.
Security Agreements and Military Exercises
Amidst the tensions, the U.S. and Panama signed controversial security agreements allowing American troops to conduct combat drills on Panamanian soil for three years.
During the crisis with Venezuela, the U.S. military conducted three joint maneuvers with Panamanian police, and further exercises are planned for the current year.
Hutchison Holdings and Port Terminals
In response to criticism, Hutchison Holdings agreed to sell the canal’s port terminals to a conglomerate led by the U.S.-based BlackRock, though the sale has yet to be finalized.
The concession contract for the ports, which faced legal challenges from high-ranking Panamanian officials, has been a point of contention.
Key Questions and Answers
- What was the source of tension between Panama and the U.S.? The dispute stemmed from U.S. President Donald Trump’s allegations that China exerted control over the Panama Canal through Hutchison Holdings.
- What actions did Panama take in response to Trump’s threats? Panama sought unsuccessfully for its ships to transit the canal for free and collaborated actively with the U.S. in combating international crime.
- What agreements were signed between the U.S. and Panama during this period? The U.S. and Panama signed controversial security agreements allowing American troops to conduct combat drills on Panamanian soil for three years.
- What is the status of Hutchison Holdings’ port terminals in the Panama Canal? Although Hutchison Holdings agreed to sell the terminals to a conglomerate led by BlackRock, the sale has not been finalized.
